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I accept the fundamental point that we need to ensure that people have an affordable home. However, would the member acknowledge, on the basis of what she has just said, that the housing supply is going down and the number of starts and completions has fallen to the lowest level since the global financial crash? We must, absolutely, seek to ensure that rent is affordable for people, but there is also an impact on the incentive to invest across all sectors, among not just private landlords but housing associations and others. We are in a dynamic situation, but, fundamentally, the housing emergency is being caused by the fact that the number of homes that are being built is decreasing.

Will the member give way on that point?

I should begin by explaining that I lodged my amendments because Graham Simpson beat me to the punch in submitting his amendments on the application of the rent control cap.

I very much welcome the Government’s move, because clarity and certainty are very important for investment. The fundamental principle in relation to some of the debate that we have had so far is that we are in the middle of a housing emergency that has had the effect of rents increasing well above wage inflation, which is intolerable.

We must attempt to come up with effective remedies, which includes ensuring that we have investment in housing supply, because fundamental to the issue is the decrease in housing supply. In my view, that is having a direct impact on the affordability of housing both for people who rent and for those who are owner-occupiers.

I believe that it is of critical importance that we have controls that protect people against excessive rent increases. No one can look at what has happened in recent years and think that we can stand by and do nothing. We have already agreed not to go into economic theses, but there is a point to make about the way in which price setting, supply and demand work in conjunction with one another. Often, when prices increase because of a reduction in supply, price controls can have the inverse effect to what was intended. If price controls are not considered holistically, they can be inflationary.

I very much welcome a consistent formula for the application of a rent cap. Ben Macpherson has made the case that a rent cap could disincentivise landlords from acting in a way that is generous and reflects the needs and requirements of their tenants. If that were expanded across the market, we could well end up with a mechanism that does not act as a ceiling, but as a floor, which would be perverse. For example, if we end up in a lower inflationary environment of 2 per cent or lower, charging 1 per cent over and above that rate would mean that renters would experience inflation that is well in excess of general inflation, which would be perverse. Therefore, it will be important that we have a mechanism that allows adjustments to be made if rents are being held above inflation, or, indeed, if other circumstances have changed. If we do not, we could incentivise landlords to use a rent cap as the mechanism by which they increase rents, and we may well see it being baked into tenancy agreements from the beginning, which would ensure that the formula becomes an automatic increase.

I welcome Katy Clark’s amendment 412 and Edward Mountain’s amendment 147. We may well disincentivise investment in properties if landlords have no ability to adjust rents. The ability to alter rent on the basis of changed circumstances and rents that have been previously set is important not only in particular cases but more generally, as we are dealing with the fundamental mechanisms by which prices are set. If that is not done in a way that reflects how the market operates as well as the behaviours of landlords and tenants, the effects could be counterproductive. I have lodged my amendments because I do not want the proposed rent cap to act as a floor—it must act as a ceiling. Therefore, there needs to be a mechanism for adjustment.

I heard what the cabinet secretary said about the wider reflection and consultation process, which is important. For that reason, I will not press my amendments 61A, 61B, 63A and 64A to 64C. However, I believe that my concerns need to be reflected in the bill at stage 3. Even though the bill may not include the precise mechanisms that I have proposed, I think that it should include broad regulation-making powers and broad objectives in order to provide clarity of intent and to ensure that such a mechanism is put in place. Failure to do so could mean that, although the bill intends to protect renters, they may face higher prices. None of us would wish to see that outcome.

Does the cabinet secretary recognise that the intention behind the amendments goes beyond simply allowing correction for individual landlords? I agree with the broad principle of having a consistent approach to the rent cap in order to provide confidence to the sector, but there is a risk that it could act as a floor rather than a ceiling, and unless there is some adjustment mechanism, it will essentially incentivise all landlords to increase not up to, but at, the level of the cap. If we assume that the Bank of England achieves its inflation target, 1 per cent over that would, in essence, mean that rents would increase by 30 per cent more than inflation, unless an adjustment mechanism were provided. Does the cabinet secretary acknowledge that that is a risk and that some consideration needs to be given to the dynamics of how the cap would operate?

The cabinet secretary is setting out the rationale with regard to investment and economic shocks. What consideration has been given to the overall economic effect that both the price cap and the exemptions may have? There is an overall effect in relation to price setting and the effect on supply and demand. Without going into a full economic thesis, I note that those go beyond simply investment and economic shocks, and there will be behavioural effects that may have unintended consequences. What consideration has been given to the broader pricing dynamic that the price cap will create?

Forgive me for intervening again, but you said that it is the group’s lack of consideration that prevents you from taking a position, but you have not asked the group to consider the amendments. Is that correct?

I am grateful to Mr Simpson for letting me intervene. Does he share my understanding of the standing orders that the member in charge, which in the case of a Government bill is the minister, has the ability to delay stage 2 in order to take further evidence? Given that we are talking about substantive matters and that the minister says that there is a lack of evidence, does Mr Simpson agree that the Government should think about whether it needs to do that? The Government says that a lack of consideration prevents it from reaching a conclusion at this point but, ultimately, stage 2 is about trying to reach a conclusion. Does he share my understanding of the standing orders?

This is a frustrating issue. Mr Greer’s point makes an awful lot of sense. The Government’s position is that it cannot take a position because it has not had time to consider the amendments. However, those amendments, both in substance and, more importantly, in principle—Mr Greer’s point on that is really important—have been discussed for some time, because the bill has been in the public domain for that period. It is also the Government’s position that it cannot come to a position because it has not consulted with the review group, but it has not asked the review group, and, more than that, the minister has not met with the review group.

Does the minister not accept that the Government has not done the required preparatory work before coming here this morning to discuss the amendments? Based on what the minister has just said, the Government has set up a process that it has not even attempted to meet. Can he understand the frustration of members in hearing that?

Thank you. I will leave it there, convener.

Following on from what was just said, I would just add that we are not looking at the skills system with a blank sheet of paper, because there is an active proposal from the Government. Jack Norquoy said earlier that we need the system to be responsive, and it seems to me that we need industry and employers to be engaged up front. However, we are removing SAAB, which was one point at which we had industry engagement, and we also had the SDS board, which had industry membership on it.

Does the panel understand where the voice of industry sits in the Government’s proposals in the bill? What should be the parliamentarians’ response to the bill, based on that issue of the industry voice? Paul Sheerin, I will come to you first.